Correlation neglect, incentives, and welfare

C-Tier
Journal: Economics Letters
Year: 2020
Volume: 192
Issue: C

Authors (2)

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We modify the Holmström–Milgrom model by letting the agent neglect the correlation between performance measures. Whenever true and perceived correlation are sufficiently low, correlation neglect enhances material welfare and expected profit. Otherwise, material welfare diminishes, and the agent may benefit.

Technical Details

RePEc Handle
repec:eee:ecolet:v:192:y:2020:i:c:s0165176520301312
Journal Field
General
Author Count
2
Added to Database
2026-01-25